RIYADH: It has taken a while but the oil market has finally responded to tensions in the Arabian Gulf. Brent crude and WTI prices rose to $65.20 and $57.43 per barrel respectively as oil traders were distracted from worries over supply to concerns about security.
Up until this week, Brent had been on a downward trajectory with the price unable to break out of the low $60’s since the end of May as the market focused on weaker demand projections, in part linked to escalating trade tensions and the fallout from the US-China trade war.
With the market now focused not only on the threat of military escalation in the Strait of Hormuz but also falling US crude oil and gasoline stockpiles, the bulls are once again on the rampage.
As we move into the last week of June, Iranian oil exports remain at historic lows as Tehran is shunned by global refiners. We are also seeing the resumption of stronger buying appetite as Asian refiners try to secure oil cargoes before the end of the month, after having waited so long to do so in the hope that prices would keep falling after persistent oil short-selling surges amid concerns of slowing oil demand.
Part of the downward movement in oil prices last month was attribute to weak refining margins for Naphtha. However, if oil prices continue to rise, this might end the weakest Naphtha refining margins in years.
Naphtha margins have been negative since early 2018 with Asia awash with light distillate amid plentiful supplies.
The ample supplies of light sweet crude which comes mainly from US shale also contributed to this bearishness as Asian refiners can’t absorb as much of this type of oil as the sour medium to heavy grades from the Arabian Gulf.
The light sweet crude grades are a shorthand for oil that has less than 0.5 percent sulfur content. These light sweet crude grades yield more naphtha and gasoline than medium and heavy sour alternatives.
WEEKLY ENERGY RECAP: Oil trading is reflecting regional security concerns
WEEKLY ENERGY RECAP: Oil trading is reflecting regional security concerns
- Up until this week, Brent had been on a downward trajectory
- As we move into the last week of June, Iranian oil exports remain at historic lows
Closing Bell: Saudi main index closes in red at 10,947
RIYADH: Saudi Arabia’s Tadawul All Share Index dipped on Thursday, losing 208.20 points, or 1.87 percent, to close at 10,947.25.
The total trading turnover of the benchmark index was SR4.80 billion ($1.28 billion), as 14 of the listed stocks advanced, while 253 retreated.
The MSCI Tadawul Index decreased, down 25.35 points, or 1.69 percent, to close at 1,477.71.
The Kingdom’s parallel market Nomu lost 217.90 points, or 0.92 percent, to close at 23,404.75. This came as 24 of the listed stocks advanced, while 43 retreated.
The best-performing stock was Musharaka REIT Fund, with its share price up 2.12 percent to SR4.34.
Other top performers included Al Hassan Ghazi Ibrahim Shaker Co., which saw its share price rise by 1.18 percent to SR17.20, and Saudi Industrial Export Co., which saw a 0.8 percent increase to SR2.51.
On the downside, Abdullah Saad Mohammed Abo Moati for Bookstores Co. was among the day’s biggest decliners, with its share price falling 9.3 percent to SR39.
National Medical Care Co. fell 8.98 percent to SR128.80, while National Co. for Learning and Education declined 6.35 percent to SR116.50.
On the announcements front, Red Sea International said its subsidiary, the Fundamental Installation for Electric Work Co., has entered into a framework agreement with King Salman International Airport Development Co.
In a Tadawul statement, the company noted that the agreement establishes the general terms and conditions for the execution of enabling works at the King Salman International Airport project in Riyadh.
Under the 48-month contract, the scope of work includes the supply, installation, testing, and commissioning of all mechanical, electrical, and plumbing systems.
Utilizing a re-measurement model, specific work orders will be issued on a call-off basis, with the final contract value to be determined upon the completion and measurement of actual quantities executed.
The financial impact of this collaboration is expected to begin reflecting on the company’s statements starting in the first quarter of 2026, the statement said.
The company’s share price reached SR23.05, marking a 2.45 percent decrease on the main market.
